We could list the number of challenges facing small businesses right now, from inflation, to hiring woes and so much more. But to what end?
Small businesses don’t want a reminder of how tough things are. They want action to alleviate the pressure they’re under, and more meaningful policy support to ensure they can survive and thrive.
Small businesses are incredibly resilient, but they still need help. This is why Xero recently presented our “Small business. Big opportunity” manifesto to the UK government – a set of recommendations to deliver meaningful policy support, and to level a playing field which increasingly favours large businesses.
By offering them the support they need, the UK economy as a whole will benefit. After all, small and medium-sized businesses generated a combined turnover of £2.3 trillion in 2021.
Here’s how the UK Government can lay the road to recovery for small businesses.
Build a small business-specific growth strategy
Big and small businesses may have certain things in common, but many of the challenges they face are decidedly different. There is no one-size-fits-all approach to tackling these issues.
Unfortunately, policy decisions are currently based on data which bundles businesses of all sizes together – an approach that doesn’t take into consideration the nuanced challenges of running a small business. It also unsurprisingly favours the larger firms, who often have the loudest voices.
In order to better tackle the unique issues small businesses face, policy should be developed with them in mind – using only their data to inform and drive real change. Without this level of specificity, small businesses won’t get the support they need.
In addition, small businesses are severely under-represented at the top table, and should be given the same access to policy makers as their larger equivalents.
Take meaningful action against late payments
Small businesses have suffered a terrible amount of damage due to late payments, a crisis that’s persisted for decades. According to our data, this practice is costing small businesses £684 million each year.
To ensure the long-term success of our small business community, late payments need to be rooted out and addressed. We’ve provided a list of recommendations to tackle this issue, but arguably most pressing is a change in terminology.
Renaming late payment “unapproved debt” moves away from language that legitimises this practice, and emphasises how larger firms are financing operations using money that belongs to small businesses.
The UK Government should also do more to showcase good practice and expose bad practice. Corporate reputation and publicity can be a potent sanction for those who persistently pay small suppliers late.
Preventing late payments won’t happen overnight, but the harm they are causing can no longer be overlooked.
Promote the role of accountants and bookkeepers
Accountants and bookkeepers are invaluable resources for a huge number of small business owners, who turn to them for more than just financial advice. Their roles now extend to all-encompassing gurus, able to provide sage advice to steer clients in the right direction.
However, not every small business owner understands the vital services these trusted advisors provide. This is why we’re asking the government and business advisory to promote the role of accountants and bookkeepers, with a national campaign aimed at encouraging more small businesses to embrace their brilliance.
We’ve also suggested increasing education and training for current and future accountants, so they’re best equipped to provide even greater support to small businesses, at the time they need it most.
Empower small businesses to embrace digital infrastructure
As a small business owner, you’ll no doubt be aware of the benefits of digital tools – from increased efficiency, to the ability to streamline and automate once-onerous tasks.
But adopting these tools can feel overwhelming, with many owners unsure how to tap into their vast potential. Our recent survey discovered one in three micro businesses find the volume of new technologies stressful to use.
This skills gap must be addressed if small businesses are to use evolving technology to overcome their challenges and thrive in the future.
Our recommendations to bridge this gap include writing off digital investments to help small businesses move online or to remote operation, as well as enhancing digital awareness by providing greater access to training.
Moving forward
Currently, government policy isn’t meeting the needs of UK small businesses, despite their vital importance to our economy. It’s time this changed, and our manifesto is a way of driving that change.
We’re working every day to get you the support you need, and ensure the future is bright for small businesses in this country.
